Foreign Policy:

Turkish Court Rejects U.S. Pastor’s Appeal

A Turkish court rejected an appeal on Tuesday for an American pastor to be released from house arrest during his trial on terrorism charges, his lawyer said, in a case that has raised the threat of U.S. sanctions against Ankara.

Officials from Turkey, Russian and Iran on July 30 agreed to the mutual release of some Syrian detainees from both the regime and opposition sides. According to participants attending the pre-meeting in the Russian city of Sochi ahead of a 10th round of Syria peace talks in Astana, Kazakhstan, as part of confidence-building measures, the sides will mutually release a limited number of detainees that they held.

Syria’s envoy to the United Nations on Tuesday railed against Turkey’s growing influence in the north, calling it an “occupation” and vowing to “expel” its troops. Turkey, a main backer of Syria’s opposition, has sent troops into northern Syria to battle the Islamic State group and Kurdish militants. It has also deployed troops in the opposition stronghold of Idlib as part of a de-escalation agreement with Iran and Russia, both of which are close allies of the government.

Ankara is focused on multiple issues in Syria, where events are not moving in “the desired direction” for Turkey, to quote President Recep Tayyip Erdogan. One area Ankara is concentrating on with growing concern is Idlib, a region where “anything can happen at any time,” according to Erdogan.

U.S. Announces Sanctions on Turkey Officials Over Detention of American Pastor

The Trump administration imposed sanctions against two top Turkish officials on Wednesday over the country’s refusal to free an American pastor held for nearly two years, stepping up U.S. pressure on Ankara to resolve a dispute that has created fissures between the two nations.

U.S. Secretary of State Mike Pompeo said on Saturday he hoped Americans detained in Turkey would be released “in coming days”, following a meeting with his Turkish counterpart in Singapore which both sides said was constructive.

Erdogan Says Roadmap in Syria’s Manbij Won’t Be Impacted by U.S. Tension

Turkey’s President Tayyip Erdogan said on Friday that he expected a joint roadmap with the United States regarding the northern Syrian city of Manbij not to be impacted by tensions between the NATO allies.

Declaring that “the clock had run out,” Secretary of State Mike Pompeo urged Turkey on Friday to free an American pastor imprisoned on espionage charges, in a case that had spurred United States to impose sanctions against two top Turkish government officials.

Despite a sharp deterioration in relations over the detention of an American pastor, the United States and Turkey remain valued partners, U.S. Secretary of State Mike Pompeo said Saturday, in an apparent bid to ease tensions that have rocked ties between the NATO allies. Pompeo told reporters on the sidelines of an Asian security forum in Singapore that the two countries would continue to work with each other in the framework of the alliance and on other matters.

Turkey to Freeze Assets of 2 U.S. Officials as Retaliation for Sanctions

Turkey’s president said Saturday the country will freeze the assets of two United States officials in retaliation for sanctions against Turkey’s justice and interior ministers over the detention of an American pastor, while attempting a conciliatory tone. Speaking in Ankara, President Recep Tayyip Erdogan said Turkey had been “patient” since the U.S. Treasury sanctions imposed Wednesday, but ordered authorities to “freeze the assets of America’s justice and interior ministers in Turkey, if there are any.”

Turkey has slammed Greece for refusing to extradite a member of the Turkish outlawed leftist group Turkish Communist Party/Marxist-Leninist (TKP/ML). “Despite the Greek judiciary’s ruling to hand over Turgut Kaya to Turkey, the Greek justice minister’s decision not to extradite him once again shows Greek politicians’ attitude toward Turkey,” Foreign Ministry spokesperson Hami Aksoy said in a statement on Aug. 5.

Turkey’s Central Bank sharply raised its 2018 inflation forecast to 13.4 percent from 8.4 percent previously, governor Murat Çetinkaya said on July 31. Speaking at the bank’s quarterly inflation briefing, Çetinkaya also said the bank was lifting its 2019 year-end inflation forecast to 9.3 percent from the 6.5 percent announced in the previous report in April.

The governor of Turkey’s central bank said on Tuesday the bank has the independence of its “objectives and tools”, and would continue to take decisions based on its own evaluations. “The central bank and monetary policy committee make decisions based on the inflation outlook alone,” Murat Cetinkaya said. “The central bank is granted independence of its objectives and tools.”

Turkey’s central bank is monitoring the debt structuring of companies and does not see significant risks, Governor Murat Cetinkaya said on Tuesday, adding that the bank was in constant talks with government and relevant parties.

BlackRock Inc. Turkish bonds holdings are on the increase even as Goldman Sachs Group Inc. says the country’s policy makers are “doing everything wrong.” Out of the five most-traded Turkish dollar bonds, the world’s biggest money manager’s positions in four increased in the third quarter, according to a filing on July 27. That’s barely a month after the average yield on Turkish dollar debt jumped to the highest since 2009, according to Bloomberg Barclays indexes.

Turkish banks have proposed rules to speed up the restructuring of company debt and allow lenders to avoid booking problematic credit as non-performing loans, a move that may help avoid defaults from piling up. The program would apply to loans that exceed 50 million lira ($10.2 million) for borrowers going through temporary repayment difficulties, that are willing to repay their debts and would benefit from a restructuring, according to a framework of principles proposed by a bank industry group.

Turkey’s exports in July showed an annual hike of 11.8 percent, the Turkish Exporters’ Assembly (TİM) announced on Aug. 1. Last month, the country’s exports totaled $14.1 billion — the highest figure ever for the month of July.

Turkey’s dollar-bonds fell across the curve on Thursday, after the United States imposed sanctions on two of President Tayyip Erdogan’s ministers over the trial of an American pastor accused of backing a 2016 coup attempt in Turkey.

Turkey’s embattled financial system needs foreign investors. Its plunging currency shows only the bravest are choosing to stick around. Turkey has one of the biggest piles of foreign-denominated debt in the developing world, much of which comes due in the next year, and a currency whose dramatic decline makes it ever more expensive to pay off.

Bulgaria opened a new looping section of its transit gas pipeline to Turkey on Friday, expanding its capacity and adding the possibility of two-way flows as the Balkan country bids to transport Russian gas from the TurkStream pipeline to Europe.

Sustainable and healthy growth should be managed simultaneously with budget discipline, Turkey’s finance and treasury minister said on Friday, adding that steps would also be taken to deepen capital markets and increase funding instruments.

The Trump administration on Friday launched a review of Turkey’s duty-free access to U.S. markets under the Generalized System of Preferences after Ankara imposed retaliatory tariffs on U.S. goods in response to American steel and aluminium tariffs. The U.S. Trade Representative’s office said the review could affect $1.66 billion worth of Turkish imports into the United States that benefited from the GSP program last year, including motor vehicles and parts, jewellery, precious metals and stone products.

Turkey’s lira and government bonds pared their declines as slower-than-expected inflation offered some relief to markets hit by U.S. sanctions. The currency rebounded from a record low against the dollar and bond yields fell after data showed consumer prices rose an annual 15.9 percent in July, slower than all 15 economist estimates in a Bloomberg survey.

The Turkish Lira reached a record low against the dollar on Aug. 6, after the Trump administration said it was reviewing Turkey’s duty-free access to the United States market, a move that could affect $1.66 billion of Turkish imports. The review by the U.S. Trade Representative’s (USTR) office, announced on Aug. 3, came after Ankara imposed retaliatory tariffs on U.S. goods in response to American tariffs on steel and aluminum.

Turkey’s energy inflation to rise in the short term, central bank says

Turkey’s energy inflation is expected to continue on an upward trend in the short term due to the outlook for natural gas and electricity prices, Turkey’s central bank said in its monthly statement on price developments on Monday.

In an attempt to curb Turkish Lira’s plunge, Turkey’s Central Bank lowered the foreign exchange markets reserve requirement limit on Aug. 6. “The upper limit for the FX maintenance facility within the reserve options mechanism has been lowered to 40 percent from 45 percent,” the Central Bank said in a statement on its website.

Representatives of Turkey’s religious communities have denied claims their groups were facing oppression, stressing that they are practicing their religions freely. “Statements alleging and suggesting there is oppression toward us are completely unfounded and injudicious,” the communities said in a joint statement, signed by the representatives of 18 religious minority groups, on July 31.

President and ruling Justice and Development Party (AKP) leader Recep Tayyip Erdoğan is planning to make some changes to the party management in the upcoming AKP convention, as parliamentary speaker Binali Yıldırım and deputy speaker Mustafa Şentop will not be on the AKP A team due to their posts. The ruling party prepares for the grand congress to be held on Aug. 18, while the party management is planning to make changes in Central Executive Board (MYK) and Central Decision and Management Board (MKYK), party sources revealed to daily Hürriyet on Aug. 5.

Main opposition Republican People’s Party (CHP) will not convene an extraordinary congress as the party headquarters announced the number of the signatures demanding leadership change is insufficient. The headquarters announced on Aug. 6 the number of signatures admissible for the convention of the extraordinary congress is 569, falling short from 630, which is the necessary number of bringing a party to the congress with a leadership change.